The euro extended early losses on Tuesday, falling to fresh seven-week lows as concerns over Italy’s fiscal outlook and a broadly stronger dollar weighed. EUR/USD was down 0.41% to 1.1444 by 07:16 AM ET (11:16 AM GMT), the weakest level since August 20. The single currency was pressured lower amid an ongoing row between Italy’s populist government and the European Commission over the country’s budget plans. Brussels and Rome have been at odds over the country’s budget deficit plans for the next three years, which breach EC rules on running excessive deficits and high debt. The row has seen Italian bond yields rise amid fears that the decision to increase borrowing will prove unsustainable given the country’s debt load. But the leaders of Italy’s two ruling parties have insisted they will not backtrack on their spending plans for next year.

GBP/USD

The GBP/USD pair maintained its offered tone, for the second consecutive session, albeit has managed to recover around 30-pips from daily lows. The pair once again managed to find some support ahead of the 1.3030-25 support area and was being supported by a modest US Dollar pull-back from seven-week tops. After refreshing fresh multi-year tops earlier today, the US Treasury bond yields started retreating and prompted some USD profit-taking, which was eventually seen lending some support. The uptick, however, lacked any strong conviction/follow-through and continues to be weighed down by Conservative MP Steve Baker’s comments that the UK should not be afraid to move forward with ‘no-deal‘. Currently hovering around mid1.3000s, within striking distance of session lows, market participants now look forward to the Brexit secretary Dominic Raab’s update on the state of the Brexit negotiations for fresh impetus.